Reporter's notebook: Advice on blockchain from Insurtech Connect

September 28, 2022 12:00 PM

ITC Vegas - blockchain panel — Richard Chattock, CEO of Insurtech Gateway; Jacqueline LeSage, Managing General Partner at Munich Re Ventures; Dan Roberts, CEO of Nayms; and Ben Peach, Director, Digital Asset Innovation & Strategy at Aon Growth Ventures, spoke on a panel about blockchain for insurance at InsurTech Connect in Las Vegas, September 21, 2022.

Embedded insurers using blockchain technology should watch out for triggering parametric elements, according to Ben Peach, director of digital asset innovation and strategy at Aon Growth Ventures. Peach, speaking on a panel about the use of blockchain technology in insurance, added that he now sees new business models for insurance due to blockchain, and new sources of capital entering insurance for the same reason. "Crypto exchanges are looking to create MGAs," Peach said. "This wouldn't have happened two or three years ago."

For traditional insurers to enter the decentralized finance world, according to Jacqueline LeSage, managing general partner at Munich Re Ventures, speaking on the same panel, regulation would be key to large scale adoption of the technology.

ITC Vegas -- AI models panel — Todd Witte, Chief of Insurance Product & Analytics at HDVI; Attila Toth, CEO & Founder at Zesty.ai; and Sheri Scott, Principal & Consulting Actuary at Milliman, spoke on a panel about AI models in insurance at Insurtech Connect in Las Vegas, September 21, 2022.

Getting state regulators to accept AI-based models for wildfire insurance requires education efforts, said Attila Toth, founder and CEO of Zesty.ai, a startup wildfire risk platform, speaking on a panel at Insurtech Connect.

"If you can explain what can be changed about the property, risk and how to mitigate that, it brings added level of transparency that the previous insurance models did not. That was a big breakthrough," he said. Zesty.ai now has approval for its operations from the California Department of Insurance.

Toth's colleague, Sheri Scott, a principal and consulting actuary at Milliman, added that "The trick is to explain to the regulator it will help the individual [policyholder] improve risk, and will help everyone including the insurance companies, so they won't have losses that they normally would."

Underwriting in the insurance market is becoming more focused, according to Shawn Ellis, managing partner at Distributed Ventures, an early stage venture capital firm focused on insurtech investments.

"In an MGA context, when a lot of these new insurance products are coming to market, you're having to have a front end carrier and you're having to have a reinsurance partner offering capacity," he said. "That's also an interesting market as interest rates are increasing. Rate replacement costs are often increasing for the underlying assets. Premiums are increasing, so that's also a market that's becoming a little bit more disciplined than it had been the last couple of years."